FOCUS: North American large-cap stocksMost people are certain that the outlook will worsen from here and those fears are probably well founded. Interest rates continue to march higher, inflation has come down but is still too high and there is broad-based uncertainty in the global economy. It is possible that January’s returns were just another bear market rally, or maybe stock prices have already anticipated a lot of the bad news that is yet to come.
Recessions may be upsetting but they are not events that should ever cause one to make significant changes to one’s portfolio. If we are heading into a recession, it is impossible to know how bad it will be, how long it will last, which industries will be affected the most and if stocks have already priced in the worst of the effects.
Our approach as always is to own great companies, run by management teams that have navigated each business well during other tough times. We own many of the greatest businesses the world has ever seen, Apple, Visa, Google, Microsoft, Costco, Ferrari, Berkshire Hathaway, Constellation Software and Adobe to name a few. These companies sell products and services that people cannot live without. Management of the companies we own are all prepared for a potential slowdown.